Wash. Mut. Bank v. Murphy

• Decision Date: 29 April 2015
• Docket Number: 2012-03036, Index No. 15811/07.
• Citation: 2015 N.Y. Slip Op. 03520,10 N.Y.S.3d 95,127 A.D.3d 1167
• Parties: WASHINGTON MUTUAL BANK, formerly known as Washington Mutual Bank, FA, plaintiff-respondent, v. Edward MURPHY, appellant, Paul Luciano, defendant-respondent, et al., defendants.
• Court: New York Supreme Court — Appellate Division

127 A.D.3d 1167
10 N.Y.S.3d 95
2015 N.Y. Slip Op. 03520

WASHINGTON MUTUAL BANK, formerly known as Washington Mutual Bank, FA, plaintiff-respondent
v.
Edward MURPHY, appellant
Paul Luciano, defendant-respondent, et al., defendants.

2012-03036, Index No. 15811/07.

Supreme Court, Appellate Division, Second Department, New York.

April 29, 2015.

10 N.Y.S.3d 96

Shlansky Law Group, LLP, New York, N.Y. (David J. Shlansky and Travis Tatko of counsel), for appellant.

Parker Ibrahim & Berg LLC, New York, N.Y. (Anthony W. Vaughn, Jr., and Scott W. Parker of counsel), for plaintiff-respondent.

Donald G. Davis, New York, N.Y., for defendant-respondent.

MARK C. DILLON, J.P., THOMAS A. DICKERSON, L. PRISCILLA HALL, and LEONARD B. AUSTIN, JJ.

Opinion

127 A.D.3d 1168

In an action to foreclose a mortgage, the defendant Edward Murphy appeals from so much of an order of the Supreme Court, Suffolk County (Cohalan, J.), dated January 18, 2012, as, upon a decision of the same court dated November 16, 2011, made after a hearing, denied that branch of his motion which was pursuant to CPLR 5015(a)(4) to vacate a judgment of foreclosure and sale of the same court entered August 19, 2008, upon his failure to appear or answer the complaint, and thereupon to dismiss the complaint.

ORDERED that the order is reversed insofar as appealed from, on the law and the facts, with costs, and that branch of the motion of the defendant Edward Murphy which was pursuant to CPLR 5015(a)(4) to vacate the judgment of foreclosure and sale, and thereupon to dismiss the complaint insofar as asserted against him, is granted.

In 2002, the defendant Edward Murphy purchased real property situated in the hamlet of Noyack, in the County of Suffolk (hereinafter the Noyack property). To facilitate this purchase, he obtained, from the plaintiff, a loan secured by a mortgage on the Noyack property.

Paragraph 15 of the mortgage provided that any notice to Murphy would be sent to the address of the Noyack property unless Murphy gave notice to the plaintiff

10 N.Y.S.3d 97

of a different address. Further, paragraph 15 required Murphy to give the plaintiff prompt notice of any change of address, and specified that “[t]here may be only one designated notice address under [the mortgage] at any one time.”

It is undisputed that, in March 2003, pursuant to paragraph 15 of the mortgage, Murphy duly informed the plaintiff that all correspondence and monthly statements pertaining to the Noyack property were to be addressed to him at his primary residence, which was located on Reade Street in Manhattan. Accordingly, the plaintiff thereafter sent all correspondence, including monthly statements pertaining to the Noyack property, to Murphy at the Reade Street address.

Murphy did not make the monthly installment payment that was due on February 1, 2007, or any payment due thereafter. The plaintiff sent a letter, dated February 17, 2007, to Murphy at his Reade Street address with respect to Murphy's failure to make payments on the mortgage for the Noyack property, and offered assistance with loan modification.

On May 25, 2007, the plaintiff commenced this action to foreclose the subject mortgage by filing the summons and complaint with the Suffolk County Clerk.

According to the affidavit of service, a copy of the summons

127 A.D.3d 1169

and complaint was served at the Noyack property upon “ ‘JOHN DOE’ (NAME REFUSED), CO–TENANT” on May 26, 2007, which was the Saturday of Memorial Day weekend. A separate copy of the summons and complaint was thereafter mailed to Murphy at the Noyack property on May 30, 2007. Upon Murphy's failure to appear or answer the complaint in this action, the plaintiff moved for, and was granted, leave to enter a default judgment against him.

Prior to the entry of the judgment of foreclosure and sale, the plaintiff sent a letter, dated September 13, 2007, to Murphy at the Reade Street address, stating that Murphy had been “identified as a potential candidate” for the plaintiff's “Loss Mitigation Program.” In the letter, the plaintiff explained that the program was designed, in part, to help Murphy prevent the possible loss of his vacation home by giving him “the opportunity to explore available alternatives to foreclosure to help resolve [his] delinquency situation,” and provided him with a loan workout package. The letter did not refer to the fact that copies of the summons and complaint commencing this action to foreclose the subject mortgage had been purportedly served upon Murphy solely at the address of the Noyack property.

The plaintiff sent a subsequent letter, dated June 15, 2008, also prior to the entry of the judgment of foreclosure and sale, in which it acknowledged that it had been contacted by Murphy, and continued to offer help to Murphy. This letter was sent to the Reade Street address. Similar to the preceding letters sent by the plaintiff to Murphy, this letter was silent as to the purported service of copies of the summons and complaint upon Murphy and the pendency of this action.

Another letter, dated August 14, 2008, was sent by the plaintiff to Murphy at the Reade Street address, reiterating that he was a potential candidate for the plaintiff's Loss Mitigation Program. This correspondence did not refer to the ongoing foreclosure litigation.

A judgment of foreclosure and sale was entered on August 19, 2008, and the Noyack property was sold at auction on November 12, 2008. A copy of the judgment of foreclosure and sale and, thereafter, a notice to vacate the Noyack property, was mailed to Murphy at the Noyack property.

10 N.Y.S.3d 98

No notice was sent to the Reade Street address.

Thereafter, Murphy received a letter, dated December 31, 2008, at the Reade Street address, from JPMorgan Chase Bank, National Association (hereinafter JPMorgan), doing business as Washington Mutual Bank, advising him that Washington

127 A.D.3d 1170

Mutual Bank, the servicer of the loan, had gone out of business, and that some of its assets had been acquired by JPMorgan, including the right to service Murphy's loan. The letter also stated that JPMorgan might be able to help Murphy “bring [his] loan current and avoid foreclosure even if [he could not] pay [his] outstanding balance in full.” The letter advised Murphy to call “right away” to learn how JPMorgan could assist him, and that he could also be eligible for home ownership counseling through the United States Department of Housing and Urban Development network of nonprofit counseling organizations. The letter informed Murphy of the total debt outstanding on his loan as of the date of the letter. The letter contained no notice of the entry of the judgment of foreclosure and sale that the plaintiff had previously obtained.

In February 2009, JPMorgan commenced a separate proceeding in the Justice Court of the Town of Southampton against Murphy, seeking to obtain possession of the Noyack property. The petition alleged that JPMorgan had acquired title to the Noyack property via foreclosure, and that a 10–day notice to terminate occupancy and a referee's deed had been served upon Murphy via “affix and mail” service, without specifying where or when Murphy was purportedly served with those documents. That petition was granted on default on March 11, 2009. Pursuant thereto, a dispossession notice was posted at the Noyack property by the Sheriff of Suffolk County on April 16, 2009. JPMorgan conveyed the property to the defendant Paul Luciano on October 13, 2009, pursuant to a bargain and sale deed.

In October 2009, Murphy moved, by order to show cause, inter alia, pursuant to CPLR 5015(a)(4) to vacate the judgment of foreclosure and sale on the ground that he was never served with process in this action, and thereupon to dismiss the complaint. In support of his motion, Murphy submitted an affidavit, in which he stated that his primary residence since 1994 had been at the Reade Street address, except for a brief period in 2002. He explained that, since 2003, the Noyack property had only been used as a summer house. He also stated that, on May 26, 2007, the date that service of process was allegedly effectuated,...